Mutual Funds · intermediate
Types of Mutual Fund Schemes
The types of mutual fund scheme under SEBI's 2026 categorisation of 40 categories: equity, debt, hybrid and life-cycle funds, index funds, ETFs and fund-of-funds, with what each category must hold and the main risk it carries.
- 01SEBI Categorization — From 36 to 40 CategoriesSEBI places every mutual fund scheme in a defined category, each with its own portfolio rule. This lesson explains why, how the current list of 40 categories is organised, and the one-scheme-per-category rule with its three exceptions.
- 02Equity Funds — Large Cap, Mid Cap, Small Cap, Flexi Cap, Multi CapSeveral equity categories are defined by the size of the companies they hold: Large Cap, Mid Cap, Small Cap, Large & Mid Cap, Flexi Cap and Multi Cap. This lesson sets out what each must hold and the risk that comes with company size.
- 03Equity Funds — Value, Contra, Dividend Yield, FocusedFour equity categories are defined by investment strategy rather than company size: Value, Contra, Dividend Yield and Focused. This lesson explains each strategy, the 80% equity minimum, the 30-stock limit and the 50% overlap rule for Value and Contra funds.
- 04Equity Funds — Sectoral & Thematic, ELSSSectoral and Thematic Funds concentrate on one sector or one theme, and an ELSS is an equity fund with a 3-year lock-in that qualifies for a tax deduction. This lesson covers their portfolio rules, their main risks and how the ELSS deduction works.
- 05Debt Funds — Overnight, Liquid, Money Market, Ultra Short and Short TermThe shortest-dated debt categories are defined by the maturity or Macaulay duration of what they hold: Overnight, Liquid, Money Market, Ultra Short Term, Ultra Short to Short Term and Short Term. This lesson explains the definitions, what duration measures and the risks that remain.
- 06Debt Funds — Medium and Long Term, Dynamic Term, Corporate Bond, Credit Risk, GiltLonger-dated debt categories are defined by Macaulay duration, and several others by what they hold: bonds of a given rating, government securities, bank and PSU debt, floating-rate instruments or one sector. This lesson sets out each rule and the two risks behind them.
- 07Hybrid Funds — Conservative, Balanced, Aggressive, Dynamic Asset AllocationHybrid funds combine asset classes, mainly equity and debt. This lesson sets out SEBI's seven hybrid categories, what each must hold, how arbitrage fits in, and why tax treatment follows the tax law's own test rather than the category name.
- 08Solution-Oriented Funds and the New Life Cycle FundsSolution-oriented funds, the Retirement and Children's Funds of the 2017 framework, are no longer a category, and the 2026 categorisation adds Life Cycle Funds built around a target date. This lesson explains what changed and how the Life Cycle exit loads work.
- 09Index Funds & ETFs — Passive InvestingIndex funds and exchange-traded funds (ETFs) are passive schemes that aim to track a market index rather than beat it. This lesson explains how the two are bought and sold, what tracking error measures and how their expenses are capped.
- 10Fund of Funds & International FundsA fund of funds invests in units of other mutual fund schemes, and international funds invest in securities listed abroad. This lesson covers the two layers of cost, currency risk, the limits on overseas investment and how a gold fund of funds works.
- 11Reading a Category Label — What It Tells You and What It Does NotA category label tells an investor what a scheme must hold, not how it will perform. This lesson explains what the label fixes, why schemes in one category overlap, the two risk labels shown beside it, and what the label leaves unsaid.
- 12SEBI Categorisation — What Changed in 2026SEBI redid its scheme categorisation in 2026. This lesson lists what changed from the 2017 framework: the number of categories, new and renamed categories, higher equity minimums, the overlap rule and the naming rule, so that older material can be read correctly.